Broadband spells demise of traditional telcos — expert
Traditional telecoms operators may be shooting themselves in the foot by offering broadband, the former chief technology officer of BT and futurist Peter Cochrane told siliconrepublic.com yesterday.
Cochrane, who retired from BT in 2000 to set up his own start-up ConceptLabs, told siliconrepublic.com that by giving consumers access to broadband, they will eventually want more and more.
Allied with the prospect of content providers like Google or Yahoo! eventually entering the broadband provision space, fixed-line telecom companies are seeing their profits from telephony and voice eroded as broadband-enabled voice services like Skype take off.
As a result, fixed-line operators the world over are hoping that broadband subscriptions will rise fast enough to counter falling voice revenues.
"Telecom companies can't afford not to give people broadband. However, in giving people real broadband they're handing the customer the instrument of their own demise. The first thing people with real broadband do is sign up for Skype.
"I think fixed-line operators are worried. They see the writing on the wall and are finding it very difficult to make profits. The really interesting thing is that they see the power seeping out of their hands and into the hands of new wave providers and eventually content companies impatient to serve," Cochrane said.
It is Cochrane's view that these very fears are driving fixed-line operators in the US to push the privatisation of the internet, giving rise to the net neutrality movement. Opponents of privatisation believe that ISPs and telecom firms want to be internet gatekeepers, deciding which sites go fast or slow, reserving speed for their own customers.
"Basically, the traditional firms want to go back to their old model of deciding prices and how much time people can use their services. They have no right whatsoever to do that and I sincerely hope that it never happens."
Cochrane believes that the goal posts have been deliberately shifted by telecoms operators and ISPs to allow themselves to define what is broadband. He also believes that operators have always had it in their power to deliver fibre to the home. "The first fibre to the home was installed in 1986. There has been no excuse since then for operators not to put fibre into the home.
"The thorny issue of getting broadband is universal. But most people that think they have broadband don't and have yet to experience real broadband.
"First of all, the powers that be conveniently changed the definition of broadband to 128Kbps and upward. That's hogwash! In the 1980s broadband was defined as 2Mbps and upwards."
He believes that telecom operators in Europe have it in their power to provide higher-speed services but are deliberately keeping speed down to ensure that broadband revenue will eventually replace lost voice revenues.
"Look at Korea — the minimum connectivity there is 10Mbps. They are currently rolling out 100Mbps and are planning for 1Gbps fibre to the home. There is no contention ratios, nobody shares it with anybody else and it is damn fast. People can listen to the radio over the internet, watch TV. It's different."
He points to a whole new slew of operators that see broadband as a commodity and are keen to take on the traditional players at their own game. "Have a look at Google. They have a metropolitan area network at Mountain View and are buying dark fibre and wavelengths of unused capacity funded through their advertising revenue. Another development is China Telecom is moving to the UK and intends to take BT head-on and establish themselves as a major player in the UK.
"The big problem is that most Europeans have not seen real broadband in action. All arguments laid out by telecom operators are fallacious. Half a megabyte is not enough to watch TV in quality when what you really should have is DVD-quality television. High-definition television and DVD are coming and we're going to need a lot more broadband."
Despite the mortal danger that fixed-line operators are in, Cochrane is adamant that they have it within their power to make a future for themselves. "Telecom companies are in a wonderful position to do wonderful things for themselves and society. They talk about infrastructure and billing being incredibly expensive. They could get rid of the lot by aggregating services. The main thing that telecom companies are worried about is that their telephony income is going down faster than broadband is going up.
"They need to be aware that people are not prepared to pay massive sums of money for a service that should be better than what they are getting. The genie is out of the bottle. Photos and movies don't cost anything anymore."
Cochrane's latest book Uncommon Sense: More Tips for Time Travellers, describes the impact on business, society and individuals of the current shift from a stable and linear world to one that is non-linear and chaotic.
Cochrane will be speaking at a conference in Dublin next week organised by the Commission for Communications Regulation and the Department of Communications, Marine and Natural Resources. He clearly relishes the changing of the order of things as new technologies like broadband disrupt stable old industries like telecoms.
"Part of the theme of my talk will be that governments are going to lose control over communications. Hooray! The more people have the freedom to communicate the more money is generated. Gross domestic product goes up and society gets richer."
To illustrate his point on the change the internet has wrought he says: "When I was growing up very few people listened to music. Because of the internet more people are listening to music than ever before in the history of mankind. There's lots of crap out there but the good stuff is great!"
• Peter Cochrane will be the keynote speaker at a Broadband Leadership Conference to be held in Dublin next Thursday 21 September at the Berkeley Court Hotel.
By John Kennedy